Mortgage rates are falling for the third week in a row, a boon for homebuyers

Mortgage rates fell for the third week in a row as market uncertainty persisted.

The average 30-year mortgage rate fell to 6.32% from 6.42% in the previous week, according to Freddie Mac. Interest rates have fallen by 41 percentage points in the past three weeks, on the heels of the 10-year Treasury yield as unrest spreads among banks.

The decline continues to provide an opportunity for budget-conscious homebuyers, but affordability and inventory challenges remain, especially as competition heats up.

“There was a sharp increase in competition this month, in three weeks the housing market accelerated, and we got an influx of pre-approvals during the days when prices were down,” Adriana Berezzyca, president of VIA Real Estate Group, told Yahoo Finance. “But there is just no inventory and rates continue to rise. This is still a difficult time for buyers seeking affordability.”

Buyers raced to catch a dip in prices

Buyers and homeowners are jumping at the chance to make strategic moves before spring, and have averaged less in the past three weeks.

For example, mortgage applications for a home purchase jumped 2% for the week ending March 24 Mortgage Bankers Association found, resulting in a fourth consecutive week of increased buying activity. Refinancing activity also increased by 5% from the previous week.

But this price drop also created more competition as buyers came in from the margins. Active inventory is still tight, so the slight increase in demand has left some buyers pricing in again.

“A $450,000 house is going to be off the market,” she said. “With competing buyers, you also get over-bids which will also affect your payment. This can stretch the budget for some families.”

Where will prices go next?

Over the past three weeks, mortgage rates have plummeted, looking different every day, according to the daily tracker at Mortgage.

“The mortgage market saw a partial recovery in March as the recent decline in mortgage rates increased demand for borrowers,” Bob Broxsmith, MBA President and CEO, said in a statement. “New and existing supply remains low, but lower mortgage rates and slower home price growth have improved buyers’ purchasing power this spring.”

Story continues

Those gains, however, could reverse course in the coming weeks if new economic data on Friday shows that inflation remains elevated, which could prompt further rate hikes from the Federal Reserve. But any additional banking problems could lower 10-year Treasury yields — and mortgage rates.

“Mortgage rates are unlikely to rise again unless the next inflation report is worse than expected,” said Darrell Fairweather, chief economist at Redfinhe said in a statement. “Side buyers should be on high alert in the coming days and weeks, which could provide a window for securing a rate closer to 6% than 7%.”

Gabriella is a personal finance correspondent at Yahoo Finance. Follow her on Twitter @employee.

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